Discount and Markup Items in Advanced Revenue Management (Essentials)
This topic describes behavior for the Advanced Revenue Management (Essentials) feature. For the classic revenue recognition behavior, see Deferring Revenue for Discount and Markup Items. The classic revenue recognition behavior is different.
Advanced Revenue Management (Essentials) supports both non-posting and posting discount and markup items. As best practice to record discounts, use non-posting discount items rather than negative quantities or amounts. For information, see Discount Items.
Non-Posting Discount and Markup Items
Non-posting discount and markup items do not post to a general ledger account. When a discount or markup item without an account specified is added to a transaction, it does not post as an individual transaction line. Instead, the item to which it is applied posts the net amount of the discount or markup. For example, when you create a sales transaction and add a non-posting discount after a line-item, the discount is applied to the previous line-item only. The net amount of the transaction is then correct and the appropriate revenue posts.
For example, you create a sales transaction that sells a service item for $1,200 to be recognized over 12 periods. You want to apply a $200 discount to the service item, making the total invoiced amount $1,000.
A non-posting discount item in the amount of $200 does not post to the general ledger when the transaction is saved. Instead, the discount is applied to the line-item amount and adjusts the net amount of the invoice. Then, the total amount scheduled for revenue recognition is $1,000.
Posting Discount and Markup Items
Revenue arrangements generated from transactions with a posting discount have the Create Revenue Plans On value set to Billing for all elements. You cannot save changes to the Create Revenue Plans On and Revenue Recognition Rule columns for revenue arrangements generated from transactions with a posting discount.
NetSuite uses the Default One-Time Direct Posting revenue rule for all elements in these revenue arrangements. This revenue rule creates a one-time revenue recognition plan with the same start and end date. Posting discount and markup items, like other special items such as shipping and taxes, do not generate revenue elements. They are included in the general ledger impact when they are billed.
Revenue arrangements whose sources include posting discount or markup items do not support revenue allocation. Revenue arrangements associated with these transactions cannot be merged with other arrangements. The Permit Discount field on the item record is ignored when the source includes a posting discount.
For example, a sales associate creates a sales order as follows:
|
Item |
Amount |
Posting Account |
Deferred Revenue Account |
|---|---|---|---|
|
Hardware |
$120 |
Sales Hardware |
Def Rev Hardware |
|
Software |
$100 |
Sales Software |
Def Rev Software |
|
Posting discount |
–$10 |
Sales Discount |
not applicable |
When the revenue arrangement is created, it has two elements with the following values:
|
Item |
Sales Amount |
Discounted Sales Amount |
Revenue Recognition Rule |
Deferral Account |
Recognition Account |
|---|---|---|---|---|---|
|
Hardware |
120.00 |
120.00 |
Default One-Time Direct Posting |
Def Rev Hardware |
Sales Hardware |
|
Software |
100.00 |
100.00 |
Default One-Time Direct Posting |
Def Rev Software |
Sales Software |
The posting discount appears in the sales order and in the invoice when the order is billed. The general ledger impact for the invoice is:
|
Account |
Debit |
Credit |
|---|---|---|
|
Accounts Receivable |
210.00 |
|
|
Def Rev Hardware |
|
120.00 |
|
Def Rev Software |
|
100.00 |
|
Sales Discount |
10.00 |
|